Minister of Revenue John Wilkinson toured Oakville business Entripy Custom Clothing this past Monday and answered questions regarding the Harmonized Sales Tax law that will take effect July 1, 2010.
“HST is a one part of a tax reform package put into place by the Ontario Government to promote small to medium sized business growth and create more jobs in Ontario,” Wilkinson said.
“Our tax reform is all about getting our people back to work. The problem that we have is that their aren’t enough jobs, and we need more of them as soon as possible,” he said.
Jack Mintz a tax expert from the University of Calgary predicted that because of this tax reform, there will be 591,000 new jobs across Ontario, and attract 47 billion dollars of investment into businesses over ten years.
“Yes, people are going to notice an increase in sales tax on about 17 per cent of the things they buy. 83 percent of things, there will be no change in sales tax.”
That 17 per cent change will be seen mostly on energy and services such as a homeowner’s electricity and heating, hotel rooms, home renovations, gasoline, cigarettes, and funeral services.
For example, legal fees that originally were only taxable under GST, which was 5 per cent – will now switch to HST and will have subject to 13 per cent of taxes.
Reinvestment to encourage growth
However, the purpose of HST is to help businesses owners reinvest in their own business to encourage growth, attract investments, and create jobs in Ontario.
Entripy Custom Clothing – a printing and embroidery company in Oakville is expected to save $15 – 20,000 in their first year under this tax reform. When a small business purchases raw materials, office supplies, forklifts, signs or shelves the 8 per cent retail sales tax that was once an expense, is credited back to them.
That is money that is intended to be reinvested back into the business.
“Our goal is to grow,” said Jas Brar, founder of Entripy Custom Clothing. “We’ve been growing for 11 years and we want to continue to grow. We want to bring on more quality staff and create more quality jobs, and the HST is one thing that will help us get there a little bit sooner.”
In order to help promote growth, this tax reform will see Ontario as the first province to eliminate the small business surtax for new businesses.
“Our tax reform is all about getting our people back to work,” Wilkinson said. “The problem that we have is that their aren’t enough jobs, and we need more of them as soon as possible,” Wilkinson said.
“We’re taking that money and permanently cutting income taxes for people and businesses which will help our tax payers, but particularly help our business sector, which is the number one source of new jobs,” he said.
“All of this is about making our businesses more competitive. Create more jobs and more wealth, and that allows to have the taxes that we need to pay for our hospitals, schools, roads and all the things that we count on.”
To find out more about the HST, visit Ontario.ca/taxchange